The aggregate demand curve is downward sloping because:
A) an increase in the price level will cause an increase in spending.
B) at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded.
C) at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded.
D) at lower price levels, exports increase, causing an increase in real GDP.
E) increases in the price level do not affect people's real wealth.

Question

Quizplus · Accepted Answer

At lower price levels, domestic goods become cheaper for foreign buyers, leading to an increase in exports, which increases real GDP.

The Aggregate Demand Curve Is Downward Sloping Because